10

894.00/434-1/2

The Ambassador in Japan (Grew) to the Secretary of State

Tokyo, August 13, 1932.
[Received August 27.]

DEAR MR. SECRETARY:

The outburst in Japan against your speech before the Council on Foreign
Relations8
savors distinctly of a tempest in a teapot if not of a
guilty conscience on the part of the Japanese, for we now understand
that the speech was merely an academic discussion of a hypothetical
case, while the Japanese took it as a specific charge of guilt.
Unfortunately I was unable to take any steps to mitigate the effect
here, because neither the text of the speech nor a resume of its
substance and intentions have reached me, and by the time the text
arrives from Shanghai the incident will presumably be closed. However
that may be, the Foreign Office has used the speech deliberately to pour
fuel on the temporarily quiescent flames of public animosity against the
United States. I say deliberately, because the violent Japanese press
reaction was based not on the press despatches from the United States
but on the Foreign Office's inflammatory interpretation of Debuchi's
cabled account, and this interpretation was given to the Japanese press
a day before it was released to the foreign correspondents.

This situation reminds me strongly of the efforts of the German
Government, by calumniating foreign nations, to build up a public war
psychology in 1914, the effort being repeated whenever some new venture,
such as the indiscriminate submarine warfare, was about to be launched.
Here in Japan the deliberate building up of public animosity

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against foreign nations in general and the United States in
particular has doubtless a similar purpose-to strengthen the hand of the
military in its Manchurian venture in the face of foreign, and
especially American, opposition. I believe that on the part of the
Japanese it is a sign of weakness, not of strength. The internal
economic and financial situation in Japan is serious and may become
desperate. The plight of the farmers is very bad, many industries are at
low ebb, unemployment is steadily increasing. The yen is falling and
prices have not yet risen proportionately. Money cannot be obtained from
abroad; I was recently told, although I cannot vouch for the reliability
of the information, that the Government had tried without success to
obtain loans from England, France and Holland in turn. It will become
increasingly difficult to obtain domestic loans. This situation is not
critical, but it may become so when the ability of the National Bank of
Japan to absorb domestic bonds comes to an end. Meanwhile millions of
yen are being squandered to support the Manchurian venture, of which the
eventual economic advantage is highly problematical, and when the full
purport of these expenses becomes known to the people, in their own
serious deprivation, there is no telling what effect it will create. I
believe that a steadily increasing anxiety exists among the Government
and the thinking men of the country outside of the hot-headed military
clique which refuses to face these facts. It seems to be primarily this
military element-vocalized by such men as Shiratori9 --
who believe that
the best way to obscure these facts is to work the public into a
patriotic and nationalistic fervor by representing foreign nations,
particularly the United States, as trying to thwart Japan's efforts for
alleged self-preservation.

Such a national temper is always dangerous. The German military machine,
supported by a carefully nurtured public war psychology, took the bit in
its teeth and overrode all restraining influences in 1914. The Japanese
military machine is not dissimilar. It has been built for war, feels
prepared for war and would welcome war. It has never yet been beaten and
possesses unlimited self confidence. I am not an alarmist but I believe
that we should have our eyes open to all possible future contingencies.
The facts of history would render it criminal to close them.

In this connection the enclosed memorandum prepared by the
Embassy,10
which will be incorporated in a despatch, may be found significant.